Starbucks complaint filed with the US District Court


Bonnie L. Hemenway (BH 2246)

Barbra S. Levy (BL-3306)

JONES, DAY, REAVIS & POGUE

599 Lexington Avenue

New York, New York 10022

(212)326-3939

Attorneys for Plaintiffs

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

STARBUCKS CORPORATION, a

Washington corporation; and STARBUCKS

U.S. BRANDS, INC., a California

corporation,

Plaintiffs,

v.

WOLFE'S BOROUGH COFFEE, INC., a

New Hampshire corporation, dba BLACK

BEAR MICRO ROASTERY,

Defendant.

No. 01-CV- 5981 Judge Swain

COMPLAINT FOR TRADEMARK DILUTION,

TRADEMARK INFRINGEMENT, VIOLATION

OF SECTION 43(a) OF THE LANHAM ACT,

VIOLATION OF NEW YORK GENERAL

BUSINESS LAW §§ 349 AND 350 AND UNFAIR

COMPETITION UNDER NEW YORK COMMON

LAW

DEMAND FOR JURY TRIAL

 

1.        This is an action by plaintiffs Starbucks Corporation and Starbucks U.S. Brands,

Inc. ("Plaintiffs"), for damages, injunctive relief, and attorneys' fees for defendant's willful

misappropriation of and damage to Plaintiffs' registered trademark, "Starbucks®."

2.       Plaintiff Starbucks Corporation ("Starbucks") is the largest and best-known

purveyor of specialty coffees in North America. Starbucks distinctive trademarks instantly

identify Starbucks highly successful coffee based beverages and other products to millions of

consumers. Defendant Wolfe's Borough Coffee, Inc., dba Black Bear Micro Roastery ("Black

Bear") is improperly seeking to benefit from Plaintiffs' substantial investment in the Starbucks®

mark by selling coffee under the offensive variation of that mark, "Charbucks." Black Bear

seeks simultaneously to trade off of the premium reputation the Starbucks® mark has come to

enjoy among consumers, and to tarnish that reputation by associating Starbucks' trademark with

coffee that is overroasted, and thus unappealing. As a result of defendant's actions, Starbucks

reputation for premium quality is being diluted, the value of its trademark is being diminished,

and consumers are being misled and confused. This action seeks injunctive relief and damages

for the harm defendant has caused.

JURISDICTION AND VENUE

        3.        Subject matter jurisdiction over the claims asserted in this Complaint is based

upon: (i) 28 U.S.C. §§ 1331 and 1338(a) as an action arising under the Lanham Act, 15 U.S.C.

§§ 1051 et. seq.; and the Trademark Dilution Act, 15 U.S.C. §§ 1125(c) and 1127; and

(ii) 28 U.S.C. § 1332(a) as an action between citizens of different states where the matter in

controversy exceeds the sum or value of $75,000, exclusive of interest and costs. Subject matter

jurisdiction over those of Plaintiffs' claims that arise under state law is based upon the principles

of supplemental jurisdiction set forth in 28 U.S.C. § 1367, and the provisions of 28 U.S.C.

 § 1338(b) as an action asserting a claim for unfair competition joined with a substantial and

related claim under the trademark laws.

        4.       Plaintiffs are informed and believe and thereupon allege that venue of this action

is proper in the district pursuant to:  (i) 28 U.S.C. § 1391(b) in that a substantial part of the

events given to the claims herein occurred in this judicial district; and/or (ii) 28 U.S.C. § 1400, in

that defendant has committed acts of infringement and regularly sells the product that is the

subject of this action in this district.

THE PARTIES

        5.       Plaintiff Starbucks is a corporation organized and existing under the laws of the

 State of Washington, with its principal place of business located in Seattle, Washington. Since

1971, it has done business under the trade names "Starbucks", "Starbucks Coffee Company" and

"Starbucks Coffee."

        6.       Plaintiff Starbucks U.S. Brands, Inc. ("U.S. Brands") is a corporation organized

and existing under the laws of the State of California, with its principal place of business located

in Burlingame, California. U.S. Brands is a wholly owned subsidiary of Starbucks. Ownership

of the trademarks described in this complaint is vested in U.S. Brands. Starbucks is a licensee of

such trademarks.

        7.       Plaintiffs are informed and believe and thereupon allege that defendant Black

Bear is a corporation organized and existing under the laws of the State of New Hampshire with

its principal place of business located in Tuftonborough, New Hampshire.  Plaintiffs are

informed and believe that Black Bear manufactures and sells to the general public, including to

consumers who reside in the State of New York and the Southern District of New York, roasted

coffee beans and related goods.

ALLEGATIONS COMMON TO ALL CLAIMS FOR RELIEF

Starbucks and its Business

        8.        Starbucks is the best-known vendor of specialty coffees in America today.

Beginning in 1971 as a single, Seattle-based coffee shop, Starbucks has grown to operate more

 than 4,310 retail locations throughout North America and in 19 foreign countries. Starbucks also

 supplies premium, fresh-roasted coffees to thousands of restaurants and other accounts

 throughout the world. Starbucks revenues in 2000 exceeded $2.1 billion - an increase of more

 than 29% over the previous year. Starbucks achievements have generated tremendous attention

 in the media - hundreds of articles have been written about the company over the last few years

 - and growing, widespread awareness of Starbucks and its products among consumers

 worldwide.  

9.       The key to Starbucks' phenomenal success is the consistent high quality and

reputation of its fresh roasted specialty coffees, brewed coffee and espresso beverages and the

other products and services it provides. Starbucks has a reputation for excellence, particularly in

the area of roasted coffees and coffee beverages, and is widely recognized for its knowledgeable

staff and superior service.

The Starbucks® Trademark

        10.     For more than 25 years, Starbucks has used the trademark "Starbucks®" (the

"Starbucks Mark") both to identify its goods and services and as the name of the company. The

Starbucks Mark is the subject of more than 56 trademark registrations issued by the United

States Patent and Trademark Office, and has been registered in more than 105 foreign countries.

        11.     Starbucks has spent substantial time, effort and money advertising and promoting

the Starbucks Mark throughout the United States and elsewhere:

                (a)     Starbucks owns, or operates through affiliates and licensees, more than

3,523 retail stores in North America. These stores - which are visited by more than 10.9 (total)

million customers per week - carry a full line of coffee, cappuccino, espresso-based beverages

 and teas brewed and served on premises; blended beverages, up to 30 different varieties of

 Starbucks® brand roasted coffees; baked goods and confections; and other branded merchandise.

 Each store prominently displays the Starbucks Mark on exterior signage and at multiple locations

 within the store.

                (b)     Starbucks has licensed Host Marriott Services Corporation to operate

 more than 152 coffee kiosks ("Starbucks Kiosks") in major airports in the U.S. and Canada. The

 Starbucks Kiosks sell Starbucks® brand coffees and other beverages prepared on site in

 accordance with strict beverage preparation and quality control procedures established by

 Starbucks, which are intended to maintain the high and consistent standards imposed by

Starbucks on its own stores. The Starbucks Kiosks utilize the Starbucks Mark in a manner

similar to that employed in Starbucks-owned retail outlets.

               (c)      Starbucks coffees are served from dedicated retail areas located in 431

Bames & Noble Bookstores ("B&N Cafes"). B&N Cafes serve Starbucks® brand coffee and

espresso beverages brewed on site in accordance with procedures established by Starbucks, and

prominently display the Starbucks Mark.

               (d)     Starbucks has entered into similar license agreements with major U.S.

supermarkets, such as Safeway, Fred Meyer and Albertson's, through which Starbucks locations

are operated within the supermarkets.

                (e)     Starbucks sells its coffee to hundreds of restaurants, airlines (including

United Airlines), sport and entertainment venues, motion picture theaters, hotels (including all

corporate-owned Sheraton and Westin Hotels in the U.S., which offer Starbucks® coffee in-

 room) and cruise ship lines. Starbucks permits these customers to use the Starbucks Mark on

 their menus and in certain promotional materials.

                (f)       Starbucks distributes several exclusive coffee blends, Starbucks® brand ice

 cream and bottled Frappuccino® coffee drinks at grocery stores and similar retailers nationwide.

 Each of these products prominently bears the Starbucks Mark.

                (g)     Starbucks operates an Internet Web site (<www.starbucks.com>) that

 generates on average, 350,000 "hits" from visitors per week. The Starbucks Mark is

 incorporated into many of the individual "pages" within this site, and is displayed on much of the

 branded merchandise offered for sale on-line.

        As a result of the foregoing and similar use and promotion, the Starbucks Mark has

 become a famous and highly distinctive trademark.

Black Bear's Misappropriation and Misuse of the Starbucks Mark

        12.     Defendant Black Bear has sought improperly to capitalize on Starbucks

investment in the creation and positive reputation of the Starbucks Mark, and the resulting

popularity that the Starbucks Mark has attained. Specifically, Black Bear manufactures and sells

a blend of roasted coffee under the name "Charbucks Blend." Inclusion of the term "char" as

part of the Charbucks name immediately creates, in the minds of many consumers, the image of

charred coffee beans, which has obvious negative connotations among potential purchasers of

coffee products. Further, "Charbucks" is so similar to "Starbucks" that consumers who hear or

read the Charbucks name will instantly think of Starbucks.

        13.     After learning of Black Bear's use of the Charbucks name, counsel for Starbucks

contacted Black Bear and demanded that it cease and desist from all further use of the Charbucks

mark. After extended negotiations. Black Bear and Plaintiffs reached an agreement in principle

pursuant to which Black Bear agreed to terminate its use of the Charbucks name. Black Bear,

however, refused to finalize this agreement, and continued to sell Charbucks Blend coffee.

        14.     Plaintiffs are informed and believe and thereupon allege that, for some period of

time following their negotiations with Black Bear, defendant ceased selling Charbucks Blend

products. However, Plaintiffs subsequently learned that Black Bear had renewed its sale of

Charbucks coffee products, and Plaintiffs therefore renewed their demand that Black Bear

terminate its use of this mark. To date, however, Black Bear has failed and refused to comply

with this demand. Plaintiffs are informed and believe that Black Bear is continuing to sell

Charbucks Blend, including to consumers located in the State of New York and the Southern

District of New York, including by means of orders taken via its Web site and by a toll free

telephone ordering system.

15.     Plaintiffs are informed and believe and thereupon allege that Black Bear chose to

use the Charbucks mark with the intent and purpose of trading off of the goodwill that the

Starbucks Mark currently enjoys and/or misleading and confusing consumers. As a result,

Plaintiffs' reputation is being tarnished and the value and distinctiveness of Plaintiffs' Starbucks

Mark are being diminished. Plaintiffs are informed and believe and thereupon allege that, absent

the intervention of this Court, defendant's illegal actions will continue, and Plaintiffs and

consumers will continue to be harmed.

 Count I

(for Trademark Dilution, 15 U.S.C. §§ 1125(c) and 1127)

        16.     Plaintiffs specifically reallege and incorporate herein by reference each and every

allegation set forth above.

        17.     Plaintiffs have used and continue to use the Starbucks Mark in interstate

 commerce. The Starbucks Mark has become and continues to be "famous" within the meaning

 of 15 U.S.C. § 1125(c).

        18.     Defendant has made and threatens to continue to make commercial use in

 commerce of a variation of the Starbucks Mark in a manner that causes dilution of the distinctive

 quality of such mark, and lessens the capacity of such mark to identify and distinguish Plaintiffs'

 goods and services.

         19.     Plaintiffs are entitled to an order from this Court preliminarily and permanently

 enjoining defendant, its agents, employees and others acting in concert with them, from directly

 or indirectly making any further commercial use of the mark "Charbucks," or any other names,

 marks or logos that are substantially similar to the Starbucks Mark.

         20.    Because defendant has willfully intended to cause dilution of the Starbucks Mark,

 Plaintiffs are further entitled, pursuant to 15 U.S.C. §§ 1117 and 1125(c)(2), to recover all

damages sustained as a result of defendant's unlawful conduct, including: (i) defendant's profits;

(ii) Plaintiffs' damages; (iii) Plaintiffs' costs of suit; and (iv) Plaintiffs' reasonable attorneys'

fees.

Count II

(for Trademark Infringement, 15 U.S.C. § 1114(1))

        21.    Plaintiffs specifically reallege and incorporate by reference each and every

allegation set forth above.

        22.    The United States Patent and Trademark Office has granted federal trademark

registrations to the Starbucks Mark. Copies of certain of these registrations are attached hereto

as Exhibit "A." U.S. Brands owns the exclusive trademark rights and privileges in and to the

Starbucks Mark in the United States. U.S. Brands licenses its trademark rights in the Starbucks

Mark to Starbucks, which uses the Starbucks Mark as a designation of source and quality for its

goods and services. Starbucks uses the registration symbol"® " on its goods and in advertising

 associated with the Starbucks Mark.

        23.    Defendant is using a copy or colorable imitation of the Starbucks Mark in a

 manner that is likely to confuse, deceive and/or cause mistake among consumers and therefore is

 infringing Plaintiffs' rights in the Starbucks Mark in violation of 15 U.S.C. § 1114(1).

        24.    Plaintiffs have no adequate remedy at law for defendant's infringement of the

 Starbucks Mark, in that: (i) the Starbucks Mark is unique and valuable property, injury to which

 cannot adequately be compensated by monetary damages; (ii) the damages to Plaintiffs resulting

 from the infringement are not precisely and fully ascertainable; (iii) the infringement injures and

 threatens to continue to injure Plaintiffs' reputation and goodwill; and (iv) the damage resulting

 to Plaintiffs from defendant's wrongful conduct, and the conduct itself, are continuing, and

Plaintiffs would be required to bring a multiplicity of suits to achieve full redress for the injuries

caused thereby.

        25.    Unless restrained, defendant's infringement of the Starbucks Mark will continue

to cause irreparable injury to Plaintiffs, both during the pendency of this action and thereafter.

Plaintiffs are therefore entitled to an order from this Court preliminarily and permanently

enjoining defendant and its agents, employees and others acting in concert with them, from

directly or indirectly infringing the Starbucks Mark in any manner, including by using any name,

mark, design or logo that is confusingly similar to the Starbucks Mark in connection with the

sale, offer for sale, advertising, or promotion of any goods or services.

        26.    Plaintiffs are further entitled to recover damages sustained in consequence of

defendant's wrongful conduct, in an amount to be determined; to recover defendant's profits; and

to recover Plaintiffs' attorneys' fees and other costs herein. Based upon the circumstances of the

 case, including the willful nature of defendant's conduct. Plaintiffs are further entitled to recover

 treble the amount found as actual damages pursuant to 15 U.S.C. § 1117.

Count III

(for violation of 15 U.S.C. § 1125(a))

         27.    Plaintiffs specifically reallege and incorporate herein by reference each and every

 allegation set forth above.

         28.    The acts of defendant alleged herein, including its use of the "Charbucks" mark,

 are likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection,

 or association of defendant or defendant's product with Plaintiffs, or as to the sponsorship, or

 approval of defendant's goods, services or commercial activities by Plaintiffs. Defendant's

 actions further misrepresent the nature, characteristics or qualities of defendant's goods, services

 or commercial activities.

 

  29.    Plaintiffs have no adequate remedy at law for the foregoing wrongful conduct of

defendant, in that: (i) defendant's actions damage and threaten to continue to damage Plaintiffs'

unique and valuable property, injury to which cannot adequately be compensated by monetary

damages; (ii) the damages to Plaintiffs from defendant's wrongful actions are not precisely and

fully ascertainable; (iii) the wrongful acts of defendant injure and threaten to continue to injure

Plaintiffs' reputation and goodwill; and (iv) the damage resulting to Plaintiffs from defendant's

wrongful conduct, and the conduct itself, are continuing, and Plaintiffs would be required to

bring a multiplicity of suits to achieve full compensation for the injuries caused thereby.

                    30.    Unless restrained, the foregoing wrongful acts of defendant will continue to cause

irreparable injury to Plaintiffs, both during the pendency of this action and thereafter. Plaintiffs

are therefore entitled to an order from this Court preliminarily and permanently enjoining

defendant and its agents, employees and others acting in concert with them, from directly or

indirectly: (i) manufacturing, producing, distributing, circulating, selling, offering for sale,

 advertising, promoting or displaying any product which tends to relate or connect such product

 in any way to Plaintiffs or to any goods or services offered, provided, sold, manufactured,

 sponsored or approved by, or connected with Plaintiffs; (ii) using any mark that is confusingly

 similar to the Starbucks Mark; and/or (iii) making any false description or representation of

 origin concerning any goods offered for sale by defendant.

         31.    Plaintiffs are further entitled to recover damages sustained in consequence of

 defendant's wrongful conduct, in an amount to be determined, and to recover their attorneys'

 fees and costs herein.

Count IV

       (For Trademark Dilution, New York General Business Law Section Section 360-1)

        32.    Plaintiffs specifically reallege and incorporate herein by reference each and every

allegation contained in Paragraph 1 through 31 hereof.

        33.    By virtue of Starbucks' long and continuous use of the Starbucks Mark, it has

become and continues to be "truly distinctive" within the meaning of New York General

Business Law Section 360-1.

        34.    Defendant has made and continues to make commercial use in commerce of the

Starbucks Mark in a manner that causes dilution of the distinctive quality of such mark, and

lessens the capacity of such mark to identify and distinguish Starbucks' goods and services.

        35.    Plaintiffs are entitled to an order from this Court preliminarily and permanently

enjoining defendant, its agents, employees and others acting in concert with them, from directly

or indirectly making any further commercial use of the Starbucks Mark, or any other names,

marks or logos that are substantially similar thereto.

Count V

Violation of New York General Business Law §§ 349 and 350

        36.    Plaintiffs specifically reallege and incorporate herein by reference each and every

 allegation set forth above.

        37.    This Count sets forth a claim for deceptive acts and business practices and false

 advertising in violation of New York General Business Law §§ 349 and 350.

        38.    Defendant's commercial use of the Charbucks mark represents a deliberate

 attempt to mislead consumers because defendant is causing a likelihood of confusion or of

 misunderstanding as to defendant's goods and services, and those of third parties, having a

 source in or the sponsorship, approval or certification of Plaintiffs, or as being affiliated,

connected or associated with Plaintiffs, and are otherwise engaging in conduct which creates a

likelihood of confusion between Plaintiffs' and defendant's products and services, creating

misunderstandings of the source of defendant's products and services as being Plaintiffs'

products and services.

        39.    By engaging in such false and misleading advertising, defendant has engaged in

deceptive acts and business practices in violation of New York General Business Law § 349, and

false advertising in violation of New York General Business Law § 350.

        40.    By reason of defendant's above-described unlawful activities. Plaintiffs have

sustained injury, damage and loss and defendant has been unjustly enriched. Plaintiffs have

already suffered irreparable harm, and will continue to be irreparably damaged unless this Court

enjoins defendant from continuing its unlawful acts. Plaintiffs have no adequate remedy at law.

Count VI

Unfair Competition Under New York Common Law

        41.    Plaintiffs specifically reallege and incorporate herein by reference each and every

 allegation set forth above.

        42.    Plaintiffs have widely advertised and used the Starbucks Mark to identify their

 goods and services. By virtue of such advertising and use, the Starbucks Mark has come to

 identify Plaintiffs as the source of goods and services marketed under the Starbucks Mark and

 such mark has come to represent valuable goodwill which is owned by Plaintiffs.

        43.    Defendant's deliberate imitation and copying of the Starbucks Mark is without the

 permission of Plaintiffs, and defendant's use of the Charbucks mark constitutes common law

 trademark infringement and unfair competition and is unlawful.

        44.    By reason of defendant's above-described unlawful activities. Plaintiffs have

 sustained injury, damage and loss and defendant has been unjustly enriched. Plaintiffs have

already suffered irreparable harm, and will continue to be irreparably damaged unless this Court

enjoins defendant from continuing its unlawful acts. Plaintiffs have no adequate remedy at law.

JURY DEMAND

        Pursuant to Fed. R. Civ. P. 38(b), Plaintiffs Starbucks Corporation and Starbucks U.S.

Brands, Inc. hereby demand trial by jury of all issues so triable that are raised herein or which

hereinafter may be raised in this action.

        WHEREFORE, Plaintiffs pray for judgment as follows:

        1.        On each and every Claim for Relief alleged herein, for damages according to

proof;

        2.       On each and every Claim for Relief alleged herein, for preliminary and permanent

 injunctive relief as hereinabove described;

        3.       On each and every Claim for Relief alleged herein, for attorneys' fees and

 enhanced damages as provided by law;

        4.      For their costs of suit herein, including their reasonable attorneys' fees; and

        5.       For such other, further or different relief as this Court may deem just and proper.

DATED: New York, New York

July 2, 2001

 JONES, DAY, REAVIS & POGUE